Umar Garba Danbatta, a professor, and executive vice-chairman, Nigeria Communication Commission (NCC), has said that digital financial inclusion can help governments ensure that social security payments reach their intended recipients and help merchants accepting digital payments gain new business intelligence and access lines of credit.
To achieving the above, Danbata disclosed that the NCC was committed “to the promotion of widespread digital infrastructure that will spur our digital ecosystem in terms of availability, accessibility and affordability of telecoms services.”
The executive vice-chairman, Nigeria Communication Commission, who spoke virtually, as the guest lecturer fifth edition of The Bullion Lecture held in Lagos, organised by Centre for Financial Journalism, with the theme, ‘Driving Pervasive Broadband Penetration to Deepen Digital Financial Inclusion for Nigeria’s Social and Economic Transformation,’ noted that despite some challenges in the Nigeria’s financial inclusion drive, some milestones have also been achieved.
Describing financial inclusion as the sustainable provision of affordable financial service that brings the poor into the formal economy, which means that being able to have access to a transaction account allows people to store money and send and receive payments, Danbatta, noted that “Great strides have been made toward financial inclusion and 1.2 billion adults worldwide have gotten access to an account since 2011. Today, 69 percent of adults have an account, according to a World Bank report.”
On digital financial inclusion, he said: “With a population of over 190 million people, research shows that 73.2 million adults, representing 41.6percent of the adult population in Nigeria are financially excluded.
“However, Nigeria remains one of the countries identified by the ITU to have developed policy directions towards deepening financial inclusion in order to address the challenges of access to formal financial services.”
He pointed out that there was the need to enhance Nigeria’s digital financial inclusion as it is an enabler for about seven out of the 17 Sustainable Development Goals of 2030.
This, he noted, was on the premise that financial inclusion is considered a key enabler to reducing extreme poverty, and boost shared prosperity, and countries with high mobile money account ownership have less gender inequality.
According to Danbatta, “Being able to have access to transaction accounts becomes the first step towards broader financial inclusion since a financial account allows people to store money, send and receive payments.
“A transaction account serves as a gateway to other financial services such as credit and insurance, start and expand a business, invest in education, health, manage risk, and improve the overall quality of lives.”
According to him, “Until recently, policy efforts to develop financial services have focused on the formal banking sector and its intermediating function in converting savings into investment.
“This meant that the urban population enjoyed access to financial services while financial institutions neglected the low-income population and rural area users.”
He noted that “1.2 billion adults have gotten access to an account since 2011. Today, 96 percent of adults have an account. 1.7 billion adults are still unbanked globally. Half of the unbanked people include women, poor households in rural areas, or out of the workforce.
“This, thus, hinders women from being able to effectively control their financial lives”.
Advancing some of the reasons people are still unbanked, the NCC executive vice chairman said that the high-interest rates on loans, high premiums on insurance products, and minimum balance on accounts make it unaffordable to low-income earners; that the lack of awareness as to the availability of products and how they are structured, priced, and used also serve as another barrier.
He further said that financial products are typically offered in urban areas and near high-income earners, and subject to heavy bureaucratic process makes it un-accessible to low-income earners.
It was his belief that “This lack of adequate access to formal financial services is the reason why most people in all regions, with exception of high-income earners, borrow from families and friends.”
In her response to Danbatta’s presentation, Chizor Malize, managing director/chief executive officer, Financial Institutions Training Centre (FITC), commended the level of digital financial inclusion in the country, saying that the drive by relevant institutions is already paying off.
Malize also noted that more players are entering the sector, expressing optimism that soonest with provision of needed infrastructure, a lot more people would join the number already being captured.
Another panelist, ‘DeRemi Atanda, executive director, SystemSpecs, commended the two regulators in this space- the Central Bank of Nigeria (CBN) and the NCC- urging them to do more.
He however said: “If we have set a target to take our broadband penetration to a certain level, where are we now? What do we need to do more to achieve the target?”
Atanda, who noted that too many targets had been set in Nigeria without having them met, wondered why there have not been punishment for those who failed the country in this regard. It was also his belief that those who have delivered on their national assignments should be rewarded also.
In his remarks, Akpan Hogan Ekpo, a professor and one of the directors of Centre for Financial Journalism, said: “We shouldn’t be too excited that we are out of recession, but must continue to do what we are doing to achieve economic development, not economic growth. If we are celebrating that we out of recession and unemployment rate is so high; food inflation is so high, how then do we move these poor masses in the unemployment circle out of poverty? If you do not have a job, how do you become digitally financially included? So, this is what the CBN and NCC should be thinking about.”
Among those at the event were Ray Echebiri, the convener and CEO of Centre for Financial Journalism; Uju Ogubunka, Bukola Onifade and Oldimeji Israel Alo, all directors of the Centre.
